The U.S. House Ways and Means Committee released a report today on the competitiveness of the U.S. olive oil industry exactly one year after requesting an investigation by the United States International Trade Commission (USITC).Unenforced standards lead to mislabeled products, weakening the competitiveness of quality producers- USITC Report

Olive oil producers, importers and marketers around the world are sifting through the 282-page document to try to gauge how the findings might affect their interests.

House Ways and Means Committee Chairman Rep. Dave Camp (R-Michigan) asked the USITC for an overview of U.S. and global olive oil production activity, information on tarriff treatments, grading practices, and an assessment of the competitive strengths and weaknesses of the United States versus major producing countries. “A significant problem is the lack of information about the commercial olive oil industry of certain major supplier countries to the US. market,” Camp said.

The USITC launched its investigation with a hearing in Washington last December where American producers, importers and lipid chemists testified on matters ranging from European subsidies and tariffs to olive oil quality and fraud.

“Substantial European government subsidies, ineffectual quality standards, combined with rampant fraud and mislabeling have prevented the U.S. olive oil industry from realizing its potential,” said California Olive Ranch vice president Adam Englehart. North American Olive Oil Association (NAOOA) Executive Vice President Eryn Balch, testifying on behalf of major importers, called for enforcement of existing international standards for olive oil grades.

Since that hearing, USITC investigators have met with more than 200 growers, millers, bottlers, traders, government officials, and other industry experts throughout all of the countries highlighted in the report. They delivered their findings to the Ways and Means Committee on August 12, and today the report was released to the public.

Although the Commission makes no recommendations on policy or other matters in its general factfinding reports, such §332 investigations are often followed by U.S. trade actions that can have an impact, including limiting imports.

“A §332 investigation can lead to U.S. objections to believed foreign trade barriers or unfair trade practices (such as subsidies), followed sometimes with formal complaints filed at the World Trade Organization, or USTR §301 actions against the objected to foreign practices,” wrote international trade lawyer Peter Koenig for Olive Oil Times. “Section 332 investigations are not idly requested. They are requested for a purpose.”

What the USITC investigators found:

– Although U.S. production of olive oil remains small on a global scale, the United States is among the nontraditional producing countries that are responding to higher global demand, and output has risen quickly in recent years. But recent investment in U.S. olive oil production has slowed in reaction to lower global prices following a succession of bumper crops in Spain, and because of concern among U.S. producers that their competitive position in the domestic market is threatened by a lack of regulatory oversight.

– Current international standards for extra virgin olive oil allow a wide range of oil qualities to be marketed as extra virgin. In addition, the standards are widely unenforced. Broad and unforced standards lead to adulterated and mislabeled products, weakening the competitiveness of high-quality producers, such as those in the United States, who try to differentiate their product based on quality. EU government support programs contribute to high overall supplies of olive oil, reducing global olive oil prices. Many small growers in the EU rely on costly traditional methods of production and have costs that are at or above global prices. Because some of these producers would likely cease production in the absence of income support from the EU, the CAP has the indirect effect of increasing total global olive oil supply and reducing prices.

– Olive oil marketers aim to differentiate their products by brand and level of quality, but price remains one of the most important factors in U.S. consumer purchasing decisions. This is due, in part, to a lack of consumer awareness of quality differences. U.S. consumers are generally unfamiliar with the range of olive oil grades and uses.

– Broadly, two types of business models are employed to attract customers in the U.S. retail market: cost leadership or product differentiation. Firms that focus on cost leadership, such as large bottlers that blend oil produced in multiple countries, attract consumers mostly on price. On the other hand, smaller, vertically integrated firms produce a higher quality, more flavorful oil and try to differentiate their product based on quality.

– The U.S. olive oil industry produces high-quality extra virgin olive oil, mostly through highly mechanized and intensively managed groves. U.S. farm level production costs for olive oil are competitive, but lack of scale and high capital costs result in higher prices in the retail market.

“We applaud the USITC for producing this insightful work and commend Chairman Dave Camp for requesting it,” said Kimberly Houlding, executive director of the American Olive Oil Producers Association. “We believe consumers deserve to understand the quality of the oil they are buying and trust its authenticity and producers deserve fair access to consumers in markets both here and abroad.”

“Given the USITC documentation of the European subsidies, high tariffs and significant adulteration and mislabeling, we are anxious to work with U.S. officials to resolve these barriers that clearly impede growth of the U.S. olive oil industry,” said Houlding.

Jason Shaw, president of Georgia Olive Farms said, “All we ask is that our oils be allowed to compete fairly on quality, taste and value on store shelves for consumers in both the U.S. and other countries.”

This is a breaking news article. Please check back for updates, analyses and reactions to the USITC report from around the world.

Well, I can see where this is headed. More tariffs and import restrictions.

Lewis Cunningham

“…these producers would likely cease production in the absence of income support from the EU…” Really? I doubt that. Most have been making olive oil far longer than the subsidies.

dickdagger

100,000’s of Hectares of olives were planted in Andalucia alone by big companies during the final decades of the 20th century – which coincidentally aligned with the introduction of subsidies. I think the US investigators were referring to these rather than the small family based olive producers that you are thinking. Source: doi:10.1017/S0956793312000052

Brian F.

Hopefully this is a document which can be used to level the playing field and give consumers what they deserve — good, healthy extra virgin olive oil — when that’s what they choose to buy.

Islay

Does this mean I should sell my Deoleo stock?

BRK

People don’t know anything about olive oil. That is why we need protection from deception and education from the Olive Oil Times. Thank you

virginia brown

More Protection? Maybe they should just learn. We’ve been through ‘protection’ before, no?

Patricia D

The ITC has provided a significant service to the American consumer. Blatant mislabeling and adulteration have been hallmarks of many in the imported olive oil business. These companies are oil brokers who do not produce a product. They simply find the cheapest oils and blend them. No effort on quality or traceability.

Larry H

That tariff Europe places on olive oil imports is unfair. Lets begin with that and enforce the existing international standard. That’s how I see it. Didn’t need 300 pages either.

mark coleman

Concerning the adulteration part of this investigation the point must be made that a US marketing order will NOT control the olive oil fraud that is taking place here in the US. The adulteration mainly takes place after the bulk olive oil arrives at a packing plant here in the US. Then it is blended with seed oils like soybean and sold as 100% olive oil. Or the extra virgin is blended with pomace and labeled as 100% extra virgin olive oil.

@

It is not just a question of adulteration with othe oils. A very serious threat for producers of good quality extra virgin is that there are oils made very cheaply with less quality olives, less expensive machinery, stored and distributed poorly which does not protect against oxidation, etc….. selling at higher price points as if it is a good quality extra virgin. The consumer then thinks all oil is the same so why pay more for a good quality oil…so that producers outside of the USA and Canada of good quality are having a difficult time surviving.

Nair

The fact is, most of the extra virgin olive oil in the market is absolutely fake. A case study of a university in Brazil (UNICAMP) proved it, and anyone can read it. None of the ten extra olive oil samples (IMPORTED), which ware bought at supermarket as it is sold a any ordinary costumer, none of then are pure, almost all of then have traces of soya oil on it composition among others contaminations. So please tell me something, how come a oil which is not even pure can be sold (classified) as EXTRA VIRGEN? The olive which originate a extra olive oil is supposed not have any contact with the soil, have no impurity at all, it should be collected from the olive’s tree by hand and it will be considered a source for a production of EXTRA virgin olive oil. I can see that the olive oil market is too far from the understanding of real mess, it is horrible unbelievable that there is no, or not efficient criteria to classify the quality of the olive oils. What a shame, considering that the olive tree is such a source of healthy and is been deteriorated for some greedy people. Thanks Nair

RH NZ

Olive oil is not too dissimilar to wine. buy one you actually like the taste of or buy to your budget. You just cant classify all olive oil to appease the arguments of quality. Its all too subjective and many variable factors.

@TheOlivarCorp

Actually there is a huge difference in quality and health benefits related to levels of oxidation and broken down fat. So that while ultimately the decision is what one likes re flavour and texture, we are trying to ensure that people can choose knowing what level they are buying and are paying a fair price. Why should they pay more for a cheaply produced oil that is highly oxidized and degraded thinking it is extra virgin even if (unfortunately re their palate) they like the flavour because they have not tasted higher quality? Once you taste a beautiful quality oil you understand the difference. Then if you still want the rougher, less complex oil upt to you…but don’t be forced to pay too much for that oil that does not cost much to produce and are cheating the consumer.

Paco Gutierrez

THE SOLUTION IS TO IMPORT EVOO OR VOO FROM COUNTIES THAT WHERE BORN TO PRODUCE THAT FROM DAY 1, LIKE (ARGENTINA, CHILE, URGUAY, NEW ZELAND, ETC)

Peter

This report is timely and duplicates the Australian experience. There is a solution model available in Australia that has been developed by the Australian Olive Association in conjunction with Standards Australia. In summary it has established an objective standard for EVOO that can be scientifically measured and audited. Products that are sold in this country are thus required to comply with the standard. It is sound in theory but requires compliance policing and cooperation of large retailers. It’s not perfect but it is a start. If the US enacted something similar then those producing and supplying substandard oil would be compelled to cooperate and the playing field would be a lot more level.

warcon68

I beg to differ. None of the countries you mention were “born to produce that from day 1″ The olive tree is not native to the American continent; it was brought there a few thousand years after being intensely cultivated in the Mediterranean region. As for the USA, it is once again throwing its weight around and trying to tell the world how to do things even if its contribution in olive oil production and consumption is minuscule. A good first step would be for the US to join the IOC and accept the objective olive oil standards stipulated by the IOC and the Codex Alimentarius, as all of the traditional olive oil producing countries do. From that point on, it is only a matter of enforcing the standards. Small, artisan EVOO producers in Greece, Spain and Italy also have to compete against large commercial groups and also want nothing less than a fair playing field and strict enforcement of quality standards.

Tom Hunter

I beg to differ with warcon68. The US has even higher standards than the IOC (ie. .05% FFA vs .07%) and the California Olive Oil Council offers a certification program that informs buyers, via a COOC label of extra virgin certification, that the oil has passed organoleptic lab tests and passed a certified panel of expert tasters in order to achieve that label. Almost all oil exported to the US fails to pass those tests…see UC Davis Olive Center reports on supermarket oils, imports as well as domestic.

Allison

What amout the American Packers like Gourmet Factory and Capatriti Brand. Bad evoo book it from Egypt,Tunisia or Turkey, they filter and blend them. After they place ” made in italy” they dont buy olive oils in Italy, its free information you see. In both sizes are many things to change and control Even a regular citicen in Itaky or Soain knows whats Pure Olive Oil. Firs why do we call sometning pure when 98% its refined with solvents Seems like walmart do not care abiut selling fake Extra Virgin Olive Oil from Gourmet Factory, What can you expect. Allison ruiz

While the sampling of perhaps better known imported brands showed a significant percentage of brands that did not pass, there are still lots of good quality oils with brand recognition not as high from ethical producers in the USA – it is just that they are not sold at supermarkets and not broadly available. It depends where one shops. Some of the brands are ones I import into Canada and can tell you the chemical analyses and taste/texture are way, way above what is required for extra virgin.

warcon68

With all due respect, did you read my post? Did I advocate anything less than strict standards and a fair playing field for all? As for the FFA, is that all? If there’s good reason for FFA to be 05% rather than 07%, then fine, let’s all agree to that and make it a global rule. But when the USA, as usual, goes it’s own way, it smells of protectionism of a small local industry rather than a grand consumer protection scheme. By the way, why does FFA have to be .05%? Do you have a good scientific reason to dispute the IOC’s .07%? Is .07% harmful to one’s health while .05% isn’t? Does the .05% “really” reflect the way EVOO has been through the ages even before America was discovered, and now the US is steering a world gone astray back to the straight and narrow? Has olive oil through the ages, while it has been contributing to the superb health of the Mediterranean people, had an FFA of .07% or .05% ? The trend to push for more and more perfection in numbers, supposedly for the benefit of the consumers, may just be a protectionist smokescreen. If the concern for consumers’ health were genuine, I would expect the US to pass equally strict regulations for the ultimate American contribution to the culinary arts, the cheeseburger but in that case it would have to go against the current of heavy lobbying and votes, while in the case of EVOO, US lawmakers can look tough in the eyes of their voters at the expense of the rest of the world who surely knows nothing about olive oil! Such arrogance!

Tom Hunter

Please pick up the book by Tom Mueller, “ExtraVirginity: the Sublime and Scandalous World of Olive Oil”. It will answer your protectionist claim and point out what olive oil producers in Italy, Spain, and other EU countries are trying to pawn off on the American public as “extra virgin”. Arrogant? Ummm, I would address that but that would assume there is equal access to real facts..

warcon68

I have read it. A fine book. However, my discussion here is not with Mr. Mueller but with you. I have asked a number of questions and have made a number of points; I have received no answers from you, just a reference to someone else’s work. By the way, a fact is a fact; there’s no such thing as a “real” fact.

@TheOlivarCorp

In North America, the situation can easily be responded to with a major first step. Customs in the US and Canada to require a chemical analysis and related panel tasting for any oil imported along with verification the laboratory is a valid one. This should be a deterrent for some trying to make a quick buck through unethical means.